11 Frequently Asked Questions About Book Royalties, Advances and Money

GIVEAWAY: I am (again) excited to give away a free copy of the new2013 Guide to Literary Agentsto a random commenter. Comment within one week; winners must live in Canada/US to receive the book by mail. Good luck to all and Happy Holidays! (Update: Allison won.)

If you’re going to wheel and deal with literary agents and editors, you’ll end up spending more time than you’d like discussing rights, contracts, advances, royalties and a whole lot of other boring important stuff. That said, I want to address the most common questions regarding how advances and royalties work. In other words, how does the payment process work when you sell a book? Here are some FAQs:

1. How do writers make money?

You sign a contract with a publisher. In exchange for signing over the North American and English language print rights to your book and possibly other rights, as well, you are paid one of three ways:

flat fee: a set amount of money upfront that’s yours to keep. The amount does not change no matter how well the book sells. For example, if your flat fee is $10,000, the amount remains the same no matter if the book sells 10 copies or 10 million.

royalties: a small amount paid to you for every book sold.

advance against royalties: a sum of money upfront to you with the promise of more (royalties) should the book sell well.

2. Which of the three methods above is most desirable?

An advance against royalties. It’s probably the most desirable, and it is by far the most common. It’s like you get both #1 and #2 combined. Let me explain exactly how an advance against royalties would work. For this example, I’ll keep it real simple (for my own sake). Let’s say the publishing house offers you an advance of $60,000 and royalties of $3/book. Note that the upfront advance of $60,000 is not inaddition to royalties, but rather part of royalties – meaning they’ve given you royalties for the first 20,000 books (times $3/book) upfront. Since they’ve already paid you the royalties of the first 20,000 books, you will not start actually making an additional $3/book until you sell copy 20,001. The royalty possibilities are essentially endless. You can make $3 a book forever as long as it keeps selling in bookstores and on Amazon.

3. What if my book bombs? Do they get the money back?

No. Any upfront money — a flat fee or advance — is yours to keep no matter what. But you’re on to something here with that question. If your book tanks and the project is a financial failure, that is a huge hurdle to get over in order to sell another book. Yes, a huge advance means a large sum of guaranteed money (sweet), but a small advance means more reasonable expectations for you to meet, and a greater chance for your book to be profitable — making you “a valuable author” in a publisher’s eyes. So I highly suggest that all authors build their author platform, get on social media, and speak at writers’ conferences to sell more books and make yourself more attractive in terms of selling future titles.

4. How much are royalties per book?

Totally depends on the cost of the book and your contract and how much it is to produce copies of the work. If your write a hardback novel, you may get $3/book. If you write a niche nonfiction, it’s probably more like $1/book. And keep in mind if you write with a co-writer, that percentage drops in half. If you work on a picture book with an illustrator, that percentage would also drop in half.

This is the big question that never gets answered. The reason it never gets answered is not because editors are being coy, but rather because there is no answer. The answer depends on the book’s genre/category, the size of the house, the scope of the deal, your platform, your agent’s skill, and much more. There are just as many $3,000 deals going on in a day as there are $100,000 deals. That’s why there is no answer. No one wants to throw a figure out there that is interpreted as fact.

6. Are there any trends in money and advances these days?

Yes. Sadly, advances are trending down. That’s bad. But the good news, if your book sells well, there’s still plenty of money to be made on the back end with royalties.

7. When do you receive the money after you sign your contract?

It depends, but know that money is usually split upon into multiple payments. For example, if you sign a deal for $12,000, you may get $4,000 (one third) upon signing the contract, then another one third upon completion of editing/writing the project, then the final one third when the book is released.

8. Do writers get the checks from the publisher?

Personally, I don’t. The check gets sent to my literary agent, who cashes it. She then sends me a check from herself for the amount of 85% of the original. An agent’s standard commission is 15% of all monies made off the book. Her financial success is directly tied into yours, which is why she fights so hard for you and tries to guide you toward a good deal.

I’m honestly not sure, and that’s why I encourage you to find a literary agent. It’s the agent’s responsibility to be in touch with the editor and accounting department to make sure the royalty statements (payments) accurately reflect proper totals that take into account sales, returns, foreign territory sales, and film rights, etc.

10. On that note, do you make money for selling foreign rights and film rights?

Traditionally yes (as long as you don’t have an unfortunate contract that deems otherwise). If a production studio wants to buy your film rights off you, they have to pay you — and that isn’t cheap, either. They will likely option your book, meaning that they buy the film rights temporarily in exchange for a more limited amount of money. Either way, you’re getting paid.

For every foreign territory (country) that you sell to, that’s more money. It works the same way as over here. You get a small lump sum with each territory (an advance) with the possibility of more (royalties) should the book sell well. If the book sells in 10 territories, let’s say, that’s a great — and easy — way to make money off a project.

11. When multiple publishing houses are interested in your work, should you just go with the highest bidder?

Not necessarily. Money will play a big, big role in the selling of the book — but there is more to consider. Are they promising a thorough marketing and publicity plan? Do they seem excited about the book? (Excitement translates to them featuring the book prominently in catalogs and bookstore shelves.) What rights and percentage splits are they asking for in exchange for that money? Do they design and produce beautiful books? Do they have a history of keeping their books in print for years and still promoting them down the road? Do they publish 10 books a year or 400? — and how will that play out in how your book is handled? All these questions factor in big time. In my opinion, it’s better to take a $10,000 deal with a house that loves the book and will push it than a house that offers double the advance but not a whole lot of love. It’s love and enthusiasm for a book that will give it the best possible chance to sell well.

What else is there to know about money and writing?

Lots, I suppose, but those are the big points. Before you sign a contract, your agent will go over it with you step by step and explain everything. Good luck!

Comments

Thanks, Chuck, this is great information. I’m sorry to hear that advances are trending downward. But it’s not good for the industry if authors don’t earn out their advances. A lower advance is less up-front risk for the publisher, but if the book sells, authors still make their money on royalties. The concern, I guess, is that publishers won’t work as hard to sell the book if they’ve got less at stake. Not sure whether that concern is valid, since publishers are still in the business of making money.Andrea Wenger´s last blog post ..Shoveling the Slush

Thank you for the helpful information about royalties and advances. I’m not thinking about that much yet, since my focus right now is to hone my craft and work on my novels, but knowledge about the industry is always helpful.

Very valuable information. I especially noted number 11– sometimes, the bigger numbers can bring tunnel vision, but the bottom line is you want to do business with folks who love your work. It’s just going to be a better relationship all around, and you can’t put a price on that. Thanks so much!Raquel´s last blog post ..Thanksgiving and Cornbread Pudding Casserole

It’s the first time I see someone take time and write this information so concisely. I like how you included you have an agent, and how it works with her, without stipulating that everyone MUST have an agent. There are so many roads to walk these days. I read site after site how they complain about all these changes in the publishing industry. I think the more options we have–the better!

Thank you, Chuck; great information. I’ve been out of touch with the book publishing world for many years (marketed my first novel nearly two decades ago), so a nice concise piece like this is wonderful as I’m gathering updated info, jogging my memory, and looking to get back in the game.

Thanks so much for giving first-time, soon-to-be-published authors like me this insight! Can you hear the song “a whole new world” playing in the background? :-) It is my theme song in the world of publishing & writing! Hope to read your book and clear the clouds of confusion!

Thank you for clearly covering the money issues. This is information I need to get straight in my head for my own writing and publishing ambitions, but that I will also share with my writing friends who don’t seem to have a handle on how the “business” side of their writing careers works. Excellent!

You’ve done a great job at putting all of the advice we hear about together into one post. I think this is really important when querying, too. Look at other books the agent you’re looking at has published lately. What kind of deals is s/he getting for authors? My favorite part of this was when you mentioned that it’s not necessarily the amount of money that’s important but how much promotion will go into the title. If a publishing house will advance 60k but do no publicity, I’d rather go for the house that can only do 40k but is 100% behind my book and willing to go the whole nine yards for me!Bonnie @ A Backwards Story´s last blog post ..Mythological Mondays: Mythology in Kay Cassidy’s THE CINDERELLA SOCIETY

Chuck, After seeing both information and misinformation on various writers’ loops from people who don’t really have a lot of first-hand knowledge, it’s good to see some solid advice from an industry professional.
Thanks for sharing with us.

Great advice, and it makes sense with all the details that an agent is necessary. With everything else that writers are already required to do in terms of writing, marketing, and platform building, the last thing we also need to try to do is properly negotiate the advance and rights terms in our contracts.Marcy Kennedy´s last blog post ..Ace Combat: Wedge Antilles vs. Kara Thrace

Thank you for this blunt and extremely useful post. I am not to the point of using this info yet, but I hope to be there in a few months. Great advice. And I’d love to win the book — it is currently on my Christmas list.Kerry Ann´s last blog post ..I Finished the 1st Draft

I had picked up most of this info in bits and pieces but you did a great job of lining it out in a straightforward and lucid fashion. Thanks for that.

One question: Since the movie or digital rights might actually provide an income stream (or streams) that would eclipse the print cash flow, how much pressure are publishers applying to grabbing those rights and how strongly should we be in defending them?alex wilson´s last blog post ..Eight Reasons to Start Writing NOW!

From an agent’s point of view, that’s a great intro to the basics, thanks. There’s so much to add! (Perhaps another WU post?)

One caution about advances against royalties…I’ll bet that $100K figure sounded good to a lot of people, right? And if your book bombs you don’t have to give it back! Good deal!

Or is it? The fact is, that when a publisher incurs a significant loss on an advance that doesn’t “earn out”, there’s no incentive to keep publishing that author. In fact, there’s a negative incentive: why throw good money after money already lost? Nowadays careers can end far faster than they took to launch.

The best plan is to match advances to the book’s real earnings in royalties. But how can you know that figure? That’s where an agent’s advice can be helpful. Smart ones aren’t shooting for the biggest possible advance, but rather to set you up for long term success.

Great information and enjoying the comments. Great point from Donald Maass on the high advance. Writing a book is a lot of work and selling, marketing, getting paid, etc. is also a lot of work.Stacy S. Jensen´s last blog post ..Monday idea: Photo prompt for PiBoIdMo

I have never read anything that explained the process of selling one’s book and I’m SO appreciative, Chuck. I understood some of this stuff but you have done a great job for those of us who don’t have an agent and have not dealt with a publisher/selling before.
Thank you.
PattiPatricia Yager Delagrange´s last blog post ..Occupy U.C. Davis Students

Thanks for this awesome tips. I was planning on starting a small as a writer but have trouble doing one. I was planning on publishing some of this ideas of mine. This was really a good help to me. If I win the book it will definitely be a big plus to me.Roe´s last blog post ..how to get a girl to like you

Thanks for the information! I’d been wondering about the advance and royalties stuff. While I personally would love to be offered a six-digit deal for my first book, I’d much prefer long-term success with a lower payout at first. Thanks for the giveaway too. Crossing fingers & toes to win…it sure will come in handy!Samantha Jean´s last blog post ..Book Review: Firelight by Sophie Jordan

Thanks, Chuck. Great post. You’ve done a great job of explaining the blurry bits that I didn’t understand. With a book nearing completion, I hope to be dealing with advances, royalties and such in the near future. Thanks for adding my name to your draw.Heather M. O’Connor´s last blog post ..Starting young–markets that publish young writers

A great overview of the murky financial waters of book publishing! I’m surprised you didn’t mention the Author’s Guild, as they review contracts and rights agreements for authors who are paying members. Unpublished authors generally aren’t members and, as those most likely seeking such answers, could benefit greatly from the organization.Danielle S.´s last blog post ..Social Media for Authors: Baby Step One

I have read before that it might be better for a debut author to have a smaller advance because they’re more likely to earn out… but is a publisher more likely to invest more resources in promotion of an author with a larger advance? Oh, to have this choice right now! hah.

Does anybody know about the differences in advances and trends in foreign markets as compared to stateside? I am trying to determine whether I am best publishing in UK first, or USA as I have a base in both countries. I have been querying agents on both sides, but can’t seem to find much information.

These are all great questions–and answers–that I hadn’t even considered. A coworker of mine just landed a contract for all twelve books of his series, and I’ve wanted to ask him these kinds of things but can only politely inquire so far. Good to know in case I ever foray into the published world, as would that handy guide, if you’re giving it away. In the meantime, to the freelance grindstone!lindevi´s last blog post ..RPG Sound-flash: Yoshida Brothers

If only I had problems such as that. Unfortunately, I can’t even get pro-magazine markets to accept my short stories, despite my creative writing professor claiming that 1 story I wrote was one of the best he’s read from a student in the past 30 yrs. Then he said, “It’s one of the best stories he’s read in the past 30 yrs. Period.” Which amounts to nothing, because like I said…

I’m just about to finish NanoWrite, because this same professor asked me to start a book. It coincided.

But reality hits hards, and if I can’t even get a short story published at a pro-market, how in world could I ever hope to sell a novel?

So I’ll dream about the promotional and marketing plan of some huge publisher concerning my book, using your blog to seed some dreams of slumber.

It would be interesting to learn more about the wonderful world of agents – I’ve never dealt with one, mostly because I don’t know how to locate one or how to match my writing with their expertise.
I have published a couple of books – and published some ebooks on Smashwords.com – but still need to learn more about the business.

Thanks so much for your post-clearly explained answers to important questions. Having turned down one offer from a would-be publisher for a book I’ve been working on, I’m happy to find information like yours. I’m hoping to snag your give-away!

All the points here were helpful. I especially picked up the value of having an agent. For those of us without, understanding the business end of the publishing world is critical.JLOakley´s last blog post ..Words

Keepers! $3 a book? Nice royalty. Great FAQ. Let’s not forget the investor commissioned book project, a rare but possible venture. It’s often times more money up front with less percentage on royalties, but can be rather lucrative.

Great advice, especially the part about going with the publisher that shows the most enthusiasm about a book. You make a great case, too, for going with an agent rather than going it alone (for a writer like myself anyway).Christi Craig´s last blog post ..Tidbits of Writing Wisdom and a Host of Gratitude

Chuck, thank you so much for making a complex topic easy (or at least easier) to understand. As a fiction writer currently looking for an agent, I will definitely be referring to this again. One for the bookmark list!

Awesome! I am especially grateful for the last answer. I find it is common for authors to simply go with the highest paying bidder. Economically, that sounds wise. But you are right, love and enthusiasm from a publisher is a better sign of how they will treat your book in promotions and marketing, so the royalties are likely to be greater.

This is a wonderful resource of information. You make it so easy to understand what can be a complex topic for us. Bookmarked in a heartbeat and I plan to share it with my readers. Thank you for taking the time for this.

Valuable information (as always). This is especially pertinent to me since I signed a contract with Grove/Atlantic two months ago for the publication of my first novel (“Fobbit”). Everything you said about the process has rung true with me so far.David Abrams´s last blog post ..The Summer I Discovered Narnia

Comprehensive view on royalties, advances! Personally, I liked that I receive small advances – book sales quickly surpassed the advances and went straight to royalties, which takes the pressure off me to worry that my books didn’t sell past the advance . . . and any less pressure in this business is wonderful! :-D

Thanks for the post. It’s really nice to stumble upon these informational articles when you’re first starting out. The publishing world can be big and scary to a beginner, but this article puts things in perspective. Thanks.

Hi, So happy to have this concise rundown on agents to share with writers in my SCBWI region. Would love to win the book, too! We have a number of writers looking for agents.Mary´s last blog post ..Compare Yourself and Weep–or Laugh

For an up and coming author, your advice is spot on. But for the author who is currently out there and is published, this also helps them. Too many people have no idea what to expect when it comes to what they can expect. Thanks for outlining it so well.

Excellent piece here – very few articles break down the facts this well. A follow-up on e-books and the reality of ‘self’publishing’ would be most welcome. There is so much bad information out there and trying to answer those questions is always complicated.

Chuck, your info on the financial side of writing books was definitely worthwhile reading, and it inspired me to continue with my long-term writing projects. I am looking forward to reading about the income-related issues of writing for periodicals in the new GLA also.

I heard you shouldn’t expect any royalties, since it’s a percentage of net, not gross, and the publisher can claim all sorts of expenses and say they never had anything left over. Is this true? Is it possible as a debut author to get a percentage of gross sales?Angela Quarles´s last blog post ..Six Sentence Sunday – 12/4/11

Thanks for the great post and the solid information for writers. Publishing is not an easy business to learn but this article like yours on money goes a long way to helping educate others. Thank you. Happy Holidays.

Ummm… read your contract carefully – advance means advance on monies to be earned, not payment for work done. Some publishing houses may expect money back from you if the book doesn’t earn enough to cover what they’ve give you. DO NOT ASSUME YOU DON’T HAVE TO PAY AN ADVANCE BACK.

It’s a tricky tightrope because a flat fee means you don’t own the copyright and will never see royalties, but you do get an honest day’s wage for your work. Royalties mean that if you create a best-seller, you’ll see big returns, but the reality is most books aren’t best-sellers. The goal, really, is not to be a one-hit wonder. That way, publishing firms will want to buy your next book and you will be able to earn out your advances.

A good agent is great because they can maximize your earning potential – they can separate your rights into different territories and earn you more money. But it’s rare that they’ll do this for the first book. Publishing houses generally prefer world rights, and for an unpublished author, this is usually one of the things they live with to get their name in print. For future work it’s more likely the rights will split up by the agent (assuming the first book sells well). Your ability to sell as an author is your leverage. Publishing (contrary to popular belief) is not a rich industry, and publishing houses need to back winners to survive.

Selling film rights is the big score for an author. Some production companies will option the work for a limited period of time with only the thought of making a movie at some time in the future. If the option period runs out, they may renew it. That’s where the true money lies – Hollywood. You can make more on your book never being made into a film than you can by selling it at any retailer, including online.

Thanks so much for this post! I admit, I’ve been a little confused as I read up on agency sites and their standard processes for publishing… It can be a little overwhelming learning the industry lingo! This post was simple to understand and I feel much more prepared for my upcoming querying process. Thanks for sharing!

I actually have a question. If I write my manuscript from work, can my work come back later and make a case that because the book was written on company time it is therefor their book or they are entitled to some or all of the royalities?

Thank you so much for all the great information. My son James Pasch wrote these three books but unfortunately did not have a clue on how to get them published.
“The Dying Breed”
“The Defiant Breed”
“The Dying Breed”
He is writing another one and hopefully this time we will be better armed. Thank you so much again.

Whenever I have a question, the answer inadvertently shows up with your name tagged to it. Thank-you for the effort and advice you put forward for us soon-to-be’s. Finding you on Writer’s Market was golden.